The volume of all construction work done in Australia fell 2 per cent in the first quarter this year on the previous quarter, confounding economists’ expectations the total would rise.

Engineering volumes fell by 2.5 per cent in the first three months of 2013. Total building volumes – including both residential and non-residential construction – slipped by 1.1 per cent.

The overall result – against a market consensus rise of 1 per cent – has again focused attention on how much longer mining-related construction can drive the national economy.

“This highlights the risks that the transition from mining investment-led growth to strength across the broader economy may be a bumpy one,"
­Westpac
senior economist
Andrew Hanlan
said in a note.

However, in the short term it is the non-resource rich states that were dragging back the national result.

Construction work done fell by 6 per cent in New South Wales and by 4.3 per cent in Victoria. By contrast, in Western Australia, construction work done slipped by just 0.2 per cent. Queensland booked a solid 4.3 per cent increase.

Peak still on the horizon

“We still think the peak in construction work done will occur in the latter half of 2013, driven by the mining construction boom," the Commonwealth Bank economists said in a research note. “The investment phase of the mining boom, as distinct from the prices and exports volumes phases, still has some way to go.

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“Large scale LNG projects in WA and Queensland still have some way to run and the rise in Queensland construction work done over the first quarter reflects this. These LNG projects are of long duration and will support mining construction over a number of years."

The latest Australian Bureau of Statistics figures show residential building declined by 1 per cent and non-residential building by 1.2 per cent in the first quarter compared to last year’s final quarter. But the
Housing Industry Association
is upbeat about a recovery in the residential sector, with its own figures showing new home sales increased by 3.9 per cent in April 2013.

“The important detached house segment of the market continues to climb out recent record lows, and this improvement has largely been broad-based across the states, " HIA senior economist
Shane Garrett
said.